Impact of PAST Installment Loans?

[EW800]

Hi,  

I know that to aid credit scores that it is generally considered a good idea to have a good mix of types of credit, such as an installment loan.  In my case, I currently do not have any OPEN installment loans, however I do have three closed installment loans showing for past vehicles.  All are now completely paid off, with perfect payment history.   I really have no need for another vehicle installment loan at this time, as our cars are in very good shape and we are happy with them.  

I am wondering if we know if having past installment loans is considered as having somewhat of a mix, or is basically like I have never had an installment loan, therefore possibly hurting me as far as points.  I am hoping that I may be getting some credit for having past installment loans with such good history.  

Thanks!  

[thom02099]

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@EW800 wrote:

Hi,  

I know that to aid credit scores that it is generally considered a good idea to have a good mix of types of credit, such as an installment loan.  In my case, I currently do not have any OPEN installment loans, however I do have three closed installment loans showing for past vehicles.  All are now completely paid off, with perfect payment history.   I really have no need for another vehicle installment loan at this time, as our cars are in very good shape and we are happy with them.  

I am wondering if we know if having past installment loans is considered as having somewhat of a mix, or is basically like I have never had an installment loan, therefore possibly hurting me as far as points.  I am hoping that I may be getting some credit for having past installment loans with such good history.  

Thanks!  

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I can't say definitively that it will help to show installment loans, but I can respond anecdotally based on my own experiences.

I have a LOT of installment loans showing on my reports for a credit history going back, as reported, over 23 years and a total history of over 40 years.  Every one of them that currently show on my report are listed as paid satisfactorily with no negatives reporting.  On my total history that shows, I actually have more installment loans showing than credit cards...and I have a bunch of  credit cards.  This fact is probably one of the reasons I have no problem ever getting an installment loan, beyond score driven data.

I currently have 3 installment loans and a HELOC showing on my reports.  One is a car loan that will be paid off in the not too distant future.  Every time I've paid off a car loan, the effect on my score has been negligable.  I've also paid off other installment loans and maybe lost 2-5 points at most.  I fairly recently added an installment loan that paid off another installment loan on a re-fi for a lower interest rate (loan on my trailer - lowered my APR by 3.5 points)

I think having installment loans, in addition to other factors, is part of the mix for maximum credit scores.  I'm one of those folks who goes against the grain of only showing one credit card with a balance <10% (I currently have several but all <10%), and yet it's not impacted my scores at all.  In fact, my scores have gone up, and that's with the fairly recent installment loan reporting, which accounted for a point increase. 

As with everything credit, YMMV.  Mix + AAofA + perfect payment history = good scores.

[user5387]

I'm not sure if there's any clear view on this.

You can see some of the threads for yourself by doing this Google search:

   site:myfico.com open closed installment loan

[GooseGirl]

I'm no expert but I can share what has happened with my own credit score. I also have several closed installment loans. When talking with a personal banker about some things I was planning I did ask if the closed installment loans still factored into my credit mix.He told me they did. I chose to open a couple of secured installment loans because, unlike you, my installment loans did not all have perfect history. Therefore, i wanted to add more installment tradelines with perfect history to "dillute" the negatives. I understand that the "dillution" may only be in my mind, but eventually the negative payments history will fall off and then I will have a really solid payment history with mutliple lenders and time frames.

By the way, when all of my installment loans were closed, i did see a small decrease in my score. When I opened the first installment loan I saw the expected decrease because of the HP and hit to AAoA. That one actually took a few months to come back. When I opened my second active installment loan, i had a small hit (i'm assuming because of AAoA as there was no HP, but the next month it actually increased more than just the initial decrease. It may have been for another reason but everything else seemed to be the same i.e. utilization, # of cards reporting balances, none of my tradelines had a birthday.

[EW800]

Thanks everyone for the excellent responses!   

[GFer]

Seems to me because they are still counted in average age of accounts they are counted. Makes sense, anyhow.

[vanillabean]

Looks like EQ 08 doesn't mind a mortgage being paid off; DW's score just increased by four points. Perhaps it was because most of the principal was remaining on it. We are down to half a month's payment on the car loan, which we are in no hurry to prepay.